A Comparative Analysis of Unemployment in Canada and the United States

Abstract

Throughout the late 1980s unemployment rates remained 2-3 percentage points higher in Canada than the U.S. We use individual microdata from the U.S. Current Population Survey and the Canadian Survey of Consumer Finances to study the emerging unemployment gap between the two countries. For women, we find that the relative rise in Canadian unemployment occurred with relative increases in per capita weeks of work. The unemployment gap for Canadian women was driven by a rise in the probability that nonworkers are classified as "unemployed" as opposed to "out of the labor force". For men, the increase in unemployment was accompanied by a relative decrease in Canadian employment rates, and an increase in the probability that men with no weeks of work are classified as "in the labor force". A comparison of annual work patterns and income recipiency in the two countries suggests that Canadians of both sexes have increasingly adjusted their labor supply to the parameters of the Canadian Unemployment Insurance system.